You're finally ready to take the step into home ownership. Buying your first home can be confusing and stressful. One way to avoid some of the stress and confusion is to prepare yourself in advance. The last thing you want to do is enter the housing market without a firm understanding of what you'll need. Before you start shopping for a new home, here are four steps that will help you through the process.
Build Up Your Credit Score
Unless you have a perfect credit score, there's always things you can do to improve your credit. Once you apply for a mortgage, lenders are going to go over your credit report with a fine-toothed comb. They're going to be looking for anything that would show a lack of creditworthiness. It's not that they're trying to sabotage your chances of purchasing a home. They just want to make sure you're worth the risk.
Before you start shopping for a new home, take the time to go over your credit report. Look for anything that might be incorrect, including accounts that aren't yours, or that are showing incorrect information. If you find anything that isn't correct, contact credit reporting agencies to have the information amended to show the correct information.
Save for the Down Payment
When it comes time to buy your new home, most lenders are going to require a down payment. While there are programs that can assist first-time home buyers with down payment assistance, you'll still need to have money for the closing costs. Now that you're getting ready to purchase your first home, start saving for your down payment. This will ensure that you have sufficient funds when you finally find the perfect home.
Know Your Monthly Budget
Owning a home comes with additional expenses. If you're not prepared for those, you might find yourself owning a home that you can't afford. Before you talk to a realtor, sit down and create a realistic monthly budget. Your working budget should include all the bills you'll bring with you, as well as any new bills that will be associated with your new home – including home insurance, home warranties, and HOA fees. Once you know your working budget, you'll know how much home you can comfortably afford.
Apply for the Loan
Once you've taken care of the items listed above, it will be time to apply for the loan. Don't wait until you find a home to apply for a loan. Applying for – and being preapproved for the loan – will allow you to know your price range, which will prevent you from falling in love with a home that you won't be approved for.
Don't take chances with your first home purchase. The tips provided here will help you avoid problems with your real estate purchase. For other questions and concerns, be sure to speak to a realtor. Click here for more information on real estate for sale near you!